Survival After Termination: What to Do when You Lose Your Job

The U.S. Department of Labor Bureau of Labor Statistics reported a national unemployment rate of 5.5% in June of 2008. That figure is up .9% from June of 2007. As more and more Americans are finding themselves out of work, making ends meet is becoming extremely difficult. The increase in unemployment creates increased competition when employment opportunities due arise. In response to this, the federal government passed a thirteen-week extension to unemployment benefits in June 2008, but unemployment benefits alone often aren't enough bridge the gap until you find a new job. Many members of the workforce are unemployed for the first time in their lives, thus they are not familiar with how to maximize their benefits and assets. Here's what your employer's HR department won't tell you about what to do when you lose your job.

Spend Your FSA Account That Day- Your Flexible Spending Account debit card will remain active until the close of business on the day that your employment comes to an end, so you need to use up the funds on the day you're let go. If you spend more than you have personally contributed year to date, that's okay. You will not have to pay it back. Whatever money is left in your FSA is yours to spend through your last day of work, so after you get laid off stop at the pharmacy and stock up on bandages, first aid ointments, athletic tape and over the counter medications. If you don't have the opportunity to do this, make sure that you get reimbursement forms from your human resources department. Although you cannot use your FSA account for medical expenses incurred after your employment comes to an end, you can request reimbursement for expenses incurred before you were terminated.

Apply For Unemployment Right Away- Whether or not your employer is giving you a severance package, apply for unemployment benefits right away. Don't hold off on applying because you think that you aren't eligible yet; that's for the Department of Labor to decide.

Leave on the Same Terms Your Employer Left You- If your employer discussed their financial situation with you and gave you several months notice before terminating your position, you owe them similar courtesies and should not leave them with any loose ends. If, on the other hand, you show up to work one day and learn that you don't have a job anymore, don't worry about work that you haven't completed. After all, you didn't know that your employment was coming to an end. Many people are willing to tie up loose ends on their final day in hopes of receiving a good reference from their employer, but this is generally worthless. Unless your employer negotiates an agreement with you where you resign, the chances are that they will not give you the stellar reference that you are looking for because their lawyers won't allow it. Companies don't want to give a good reference for an employee that they let go because it opens up the door to a wrongful termination lawsuit. Once your laid off, say good bye to your friends, box up your belongings, and leave. Don't stick around to help tidy things up.

Negotiate Your Severance Package- Employers don't give out severance packages to be nice. Severance packages are "hush money." Review the severance package that is offered to you and decide if it is reasonable considering the information that your employer needs you to keep quiet. Chances are that it is not. Once you've come to this realization, call up the member of upper management (not an HR person who knows nothing about the ins and outs of your employment) who knows what you know and has the power to influence your severances package. Without black mailing him, kindly start negotiating your severance package number. Don't turn over specific pieces of information that you can leak (i.e. remember when you over-billed this customer) because then they'll just prepare to do damage control. This is a very sensitive negotiation, but if handled correctly, you should increase your severance package considerably.

Apply for Medicaid and Any Other Government Assistance Available- If unemployment pays your $2000 a month and your insurance cobra would be $900 a month, the figures don't work out well. Apply for Medicaid and you may receive all of your health insurance for free. Many government assisted health insurance programs require that you have a break in insurance coverage before acceptance, with an exception for people who lose their insurance due to job loss. While you're applying for Medicaid, apply for every other assistance program available as well. Your new financial situation may make you eligible for food stamps, energy assistance, WIC, or free lunches for your children in school as well. Your taxes have been paying into these programs for years. It's time to see if you can use them.

String Along Your Cobra- Cobra regulations vary by state, but in some states you have up to sixty days to elect coverage and then another forty-five days to make a payment. That gives you over three months before having to make a financial commitment to the program. Your insurance company will not make any payments until you make your first payment to them, but as soon as you do, they'll make all appropriate payments for expenses incurred after your termination. If you receive Medicaid or gain insurance coverage through another employer, you can opt not to pay your Cobra fee and you lose nothing.

Work Part-Time- Many states allow you to make a certain amount of money before it cuts into your unemployment benefits. In some states, if you are receiving maximum benefits, you can earn almost $200 through part-time work before in reduces your weekly payout. Even then, your claim remaining balance would be reduced by less due to a reduced payment, thus extending the life of your claim. This can be a great opportunity to try something that you've always wanted to do like working at a baseball stadium, get discounts on your kids' clothes by working at a children's store, or take a stab at a commission only sales position. Check with your local unemployment office about how this works in your state.

Go to School- You've got the time. If you have the money, you should use this opportunity to upgrade your education. Some states will even extend you unemployment benefits longer if you're going to school. Check with your local unemployment office to see if you can work this into your plan.